Kernel Principal Component Analysis (KPCA), an example of machine learning, can be considered a non-linear extension of the PCA method. While various applications of KPCA are known, this paper explores the possibility to use it for building a data-driven model of a non-linear system—the water distribution system of the Chojnice town (Poland). This model is utilised for fault detection with the emphasis on water leakage detection. A systematic description of the system’s framework is followed by evaluation of its performance. Simulations prove that the presented approach is both flexible and efficient.